How to save money on your divorce

A drawn-out court battle can quickly eat away at your family’s assets, but luckily for divorcing couples there’s a much easier, cheaper way.

WARRING couples can save tens of thousands of dollars and years of divorce drama by using mediators instead of battling over a break-up in court.

Divorce lawyers charge between $200 and $700 an hour, and barristers up to $10,000 a day – so a drawn-out court battle can quickly chew through the asset pool.

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Australian Law Reform Commission president Sarah Derrington, who chaired the Federal Government’s recent review of family law, said she knew of one case where the couple spent all their assets on legal fees of $425,000.

Her advice to a friend getting divorced would be to “work it out amongst yourselves’’.

“What do you need the court to decide for you?’’ she said.

“You know what your asset pool is, you can do a calculation of what your future needs might be.

“You need to make sure that any children of the relationship are your first priority - can they be properly housed, closed, fed and educated?

“It’s not up to your ex-partner to support you – you are both adults and you can get on with an income-producing occupation.

“It may not be the same standard that you were used to and that’s unfortunate, but you’re going to make that financial standard much worse if you want to share your asset pool with lawyers.

“Remember that once upon a time you loved each other.”

Divorce can be a drawn-out, costly process if the courts are involved.

Australia has no-fault divorce, so the Family Court – which hears complex cases involving child custody – and the Federal Circuit Court – which considers 80 per cent of divorce applications – does not consider why a marriage ended.

The only ground for divorce is that the marriage broke down and there is no reasonable likelihood the parties will get back together.

A couple has to prove they have lived separately and apart for at least 12 months – although it is possible to be separated under the same roof.

A court can only grant a divorce if it is satisfied that proper arrangements have been made for any children younger than 18.

Couples can reach agreement on property and custody issues and file it with the court, or ask a judge to make the decision for them.

Parents can make a written parenting plan to decide where the children will live, which school they will attend and who will pay for their living costs.

If parents have trouble agreeing, they can hire a mediator – known as a Family Dispute Resolution Practitioner - to help negotiate an agreement.

The Family Relationships Advice Line can provide free legal advice on 1800 050 321.

The Federal Government funds Relationships Australia to provide mediation, with fees based on family income and free for low-income families.

A statue of Themis, the Greek God of Justice stands outside the Supreme Court in Brisbane, Thursday, Oct. 20, 2016. (AAP Image/Dave Hunt) NO ARCHIVING

Relationships Australia national executive director Nick Tebbey said mediation gave both people control over decisions.

“It aims to promote co-operation, contain conflict and preserve relationships while providing a clear, structured process for negotiating and resolving issues,’’ he said.

“Our practitioners have expertise in providing high quality services to families with complex dynamics, including family violence, complex trauma, poor mental health and substance abuse.’’

Family lawyer Jodylee Bartal, a partner at national law firm Gadens, says hiring a lawyer can cost from $200 to more than $700 a year, depending on seniority.

Hiring a mediator can cost $2000 a day for a junior counsel, and $5000 to $10,000 for an experienced barrister – but the parties do not necessarily need a lawyer.

Ms Bartal said couples who failed in mediation – which requires the agreement of both sides – could opt for arbitration, where a barrister or retired judge makes a decision that is legally binding on both parties.

“Everything’s better than fighting in court,’’ she said.

“If you subject yourself to litigation and a judge-ordered determination, you’re relinquishing some control.

“You’re basically saying to the judge, ‘you make a decision, we can’t.’’’

Brisbane family lawyer Jennifer Hetherington has a motto that “conflict is not inevitable’’.

She said mediation could cost each side $10,000 to $15,000 – far less than a court case costing $50,000 to $150,000.

“For the sake of your kids, don’t go to court – get an agreement if you possibly can,’’ she said.

“Kids don’t generally thank parents for dragging their cases through court – the outcomes aren’t great and sometimes they end up with mental health issues.

“The delays in court mean it can take two or three years to go to trial and then it could take up to a year to get a judgment, and possibly longer.

“Parents and kids feel that stress – they can’t move on with their lives and the children get caught up in the conflict between mum and dad.’’

Ms Hetherington said the Family Court had to order a “clean break’’ financially between divorcing couples.

But in mediation, couples could make binding financial agreements that are more flexible.

“People might agree to keep the house until the kids finish school, and then sell it and split the proceeds,’’ she said.

“I’ve had people decide to stay in a business together, with an exit strategy in place, that meant they could keep the business going for the benefit of family income and share in the value they built up.’’

Michael Lynch Family Lawyers director Amy Honan said mediation costs between $5000 and $25,000 for each side, but court battles can cost each party $40,000 to $200,000.

Ms Honan said court cases were expensive because overloaded judges sometimes listed two or three matters for trial but only had time to hear one case that day.

If a judge was away sick, both parties still had to pay solicitor and barrister bills for preparation and showing up at court.

“You can just throw away $10,000 or $20,000 between the parties because no one’s there to hear the matter,’’ she said.

Ms Honan said some mediators specialised in taking children’s views into account to reach custody agreements.

She advised divorcing couples to consult an accountant or financial adviser to work out the best way to split assets and minimise the cost of a break-up.